The Global Financial Crisis led to the Government and the Financial Markets Authority (FMA) making an effort to try and protect New Zealand investors with new legislation. Despite this, many people are too trusting and lack basic financial knowledge, which means many New Zealand investors are still at risk.

We have some of the best legislation in the world, but if some investors just don’t know what they need to know to be safe, or won’t take responsibility, they’re still going to get burnt.

We would urge anybody who is investing their money to research the legislation, which has been designed to protect investors. I am constantly surprised by how few investors ask to see a company’s ‘Signed Custodial Report’. Even worse, with so few people asking, many providers of financial investment services don’t get caught out by the fact that they don’t have one. This despite the legal requirement of the Financial Advisers Act 2008 / Financial Markets Conduct Act 2013.

Anybody who has custody of your money must furnish an annual custodial services report. It is an audited document that explains the procedures, controls and policies the company has in place to make sure that what the client asks for is happening, and the money is where it should be.

It is ultimately the investor’s responsibility to look into their investments. Scams like Ponzi schemes would struggle if people took the time to educate themselves. That being said, you don’t know what you don’t know and in general New Zealand needs better education around investing.

Kiwis are by nature are a bit too trusting and that makes us vulnerable. We live in a safe country that was built through mutual reliance, but the world has changed.

The Government and the FMA are doing what they can when it comes to legislation, but technology is developing quickly, making it hard for them to keep up. In today’s environment, we have apps that make investing easier, cryptocurrencies that operate outside of the regulated environment, micro-share purchasing and various investment and lending platforms springing up all over the place – you place your money at your peril.

It’s a great opportunity for investment, but that means that New Zealander’s need to be careful. While new technology provides more choices than ever before, you need to be better educated before running into these new opportunities.

That said, we are aware that it can be difficult to find the necessary information.

Investors want to explore these new tools and opportunities. Many of the people in the best position to advise them – such as financial advisers – however, are resistant because some are still tied into the traditional formats.

As a result, many consumers are having to go it alone. Fortunately, the law and the FMA have in place some safety nets – but consumers need to know what these are. If you are an investor, always request a copy of a current audited and signed custodial report before investing and read up on the legislation that is out there to protect you.